Benign inflation numbers trim Aussie loss

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The dollar closed slightly weaker yesterday, bouncing back from
a drop of a third of a US cent after the release of softer than
expected inflation data.

At the 5pm close, it was trading at US74.62 ¢, compared
with US74.78 ¢ on Tuesday. It touched a low of US74.31 ¢
just after the consumer price index data was released.

The Bureau of Statistics reported that the CPI had risen by 0.4
per cent in the September quarter, bringing the annual rate to 2.3
per cent. Economists had forecast a median rise of 0.7 per cent in
third-quarter headline CPI, for an annual rise of 2.6 per cent.

St George Bank's foreign exchange trading manager, Stuart Moore,
said the Reserve Bank was now unlikely to raise rates this
year.

"The Aussie dropped down to the low to mid-74.30 level after the
lower than expected CPI number, which takes the pressure off
(interest) rates for now," Mr Moore said.

Having broken through US75 ¢ for the first time in six
months during Tuesday's session, the dollar spent the offshore
session in a range between US74.37 ¢ and US74.81 ¢.

Mr Moore said the Aussie was likely to stay below US75 ¢
between now and the US presidential election on Tuesday.

"I think 74.20 on the downside up to 75 on the topside certainly
should cover us until then," he said.

Bonds closed stronger after being well supported due to the
release of the inflation data. The 10-year bond closed on a yield
of 5.295 per cent, from 5.300 on Tuesday, and the three-year bond
was at 5.065 per cent from 5.110.